Land O’Lakes loan fund helps farmers make sustainability upgrades

Farmer Finance

The cooperatively-owned Minneapolis-based food giant expects the $20 million loan fund to be fully deployed by mid-year

Land O’Lakes farm in Lancaster, PA. | PC: Fortune

The cooperatively-owned Minneapolis-based food giant has made the first two loans from a $20 million fund to help its member-farmers finance improvements with environmental benefits.

The collateral for the loans is the farmers’ stakes in the cooperative itself, giving members a way to use their equity to improve their operations.

A Pennsylvania farmer purchased a manure separator, while a third-generation family farm in California used a $1.3 million loan to install a waste digester.

Land O’Lakes’ Tina May said at the Conservation Finance conference in New York that she expects the loan fund, which is run through the co-op’s in-house bank, to be exhausted by mid-year when it may be replenished; she had originally sought a $60 million fund. Farmers get an interest-rate reduction in return for providing sustainability data back to Land O’Lakes.

“We are the first-ever dairy co-op to do sustainability-based financing like this,” May said, “and first to use equity co-op financing.”